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Sunday, May 8, 2016

Weekend Portfolio Analysis (May 8, 2016)

The S&P fell a little bit more this past week and it is now up only 0.65% for the year. Today is Mother's Day. I'll go on a Social Media diet as there will be nothing relevant to see until tomorrow. Instead, I'll focus on meeting with Mom and Sister. I'll hug them, kiss them and tell them how I'm killing it with Options. Enough with the ramble.

Recent Trading Activity

- Closed June30 SPX 2200/2225 Credit Call spread for a $1,600 gain on Thursday, releaving some upside pressure. This CCS was part of an adjusted unbalanced Iron Condor that I can finally put behind now. All the details here.

Market Conditions
(Click on image to enlarge)
Stochastics: 16 (oversold)
McClellan: -89 (neutral)
Stocks above their 20 DMA: 41% (neutral)

No man's land.
We were close to an oversold extreme this week but never truly got there, according to my rules of what oversold is. It would have been nice to have sold some RUT Credit Put spreads, but not all hope is gone. A simple 2% decline from here would easily get us there. I would be looking to add a June position, as part of my plan to start trading my short term system again. There are no positions in June at the moment.

The yellow lines, as usual, represent current positions. Looking at all those lines and where the SPX Index is, the market would have to make pretty drastic moves at this point to hurt me, so, I'm comfortable holding all this inventory.

Current Portfolio

May31 SPX 2125/2150 Credit Call Spread
SPX 2150 Long Calls & 1885/1890 Credit Put spread
Almost at the break-even mark already. The whole combo now shows an 80% probability of success at expiration. Way to turn around what was a seemingly lost cause. I may take it off this week, but if we start with a nice sell off, I will leave it for a while longer.

July29 SPX 1650/1675/2200/2225 Unbalanced Iron Condor
Call side 8 deltas. Put side 5 deltas. Comfortable to ride at the moment. Still looking to close the Call side for 50% or 60% of max profit to alleviate upside risk in the portfolio, as I'm still holding 3 Credit Call spreads in total.

July SPY Long 169 Puts
Portfolio Insurance.

August SPX 1750/1760/2250/2260 Unbalanced Iron Condor
Looking good, 10 deltas on the Put side, only 5 on the Call side. Planning to close the Call side early for 0.20 debit, which may be possible if SPX goes down to 2010-2020.

Action Plan for the Week

- If SPX rallies beyond 2,120, close the May31 SPX Credit Call spread for a loss. At the same time, we would be closing the SPX 2150 Long Calls & 1885/1890 Credit Put spread to mitigate those losses. I think SPX 2,120 is unlikely to see in just a week. On sideways action, I'll consider closing all these positions for a small profit. If we sell off early in the week, I'll keep holding them.

- Close the July29 Call spreads for 1.20 debit or so. This should be possible with a 20-25 point drop.

- Close the Aug31 Call spreads for 0.20 debit. This could happen with SPX going down to 2010-2020.

- Close the July29 SPX 1675/1650 Credit Put spread for 0.35 debit, which could happen on a 50 point rally. That is SPX going up to around 2,110.

- Sell June RUT Credit Put spreads if we reach an oversold extreme condition.

- Cash gains on long SPY July Puts on an 80%-100% ROI shall the markets fall significantly.

The LT Trend Sniper had a rough week after initiating long positions in both EURUSD (Euro-dollar) and XAUUSD (Gold)

The entry in the case of EURUSD was at 1.14613 (may be slightly different in other brokers. Remember Fx is not a centralized market), and right after the entry, the position started to make great progress, with a high of 1.1615 reached less than two days later. Unfortunately, it went all downhill from there. Here's the chart (daily candles) for the EURUSD in the last few days.

The Stop Loss level had been moved up 3 times with the initial advance. The robot got stopped out at 1.14214 for a small 39.9 pip loss which represented 0.74% of the account in this case.

With the third position closed, these have been the results for EURUSD in 2016: +0.64%, -0.75%, -0.74%. The Sniper hasn't hit homeruns so far this year. Being a trend follower, it may be frustrating for some to have so many losing trades, where small profits could have been taken. However, that is the price to pay. That frustration is the only way to give ourselves enough chances to hit the eventual homeruns. The EURUSD balance is down 0.86% for the year. We're hanging there, pretty much in the fight. There should be 3 more trades the rest of the way and any one of them could be enough to define a positive year.

In the case of Gold (XAUUSD), the long position is still in play from a buy at 1290.61. Some initial progress was made right after entry, but not as much as in the Euro. The Stop Loss got to be trailed once, decreasing the risk from 3% to just 2.25% now, and a nice rebound on Friday put us almost back in the black.

In the case of Gold, the Sniper is a little more impatient to act, and it expects profits to be made quicker. It will exit the position in the next few hours if we Gold doesn't make a close that is higher than the entry.

We've had no homeruns in Gold this year either . The two closed positions were: +3.77% and -2.23%. Therefore, trading Gold has resulted in a +1.45% gain so far. This, of course, does not take into account the third position of the year, still open.

Combining both the EURUSD and XAUUSD in the same portfolio, we are up +0.59% for 2016, with 2 wins, 3 losses, 1 open position and no big trend caught yet. In total, I expect 6 more positions the rest of the year. We'll see if a strong trend develops that we can nail.

Economic Calendar
Monday: China CPI
Wednesday: US Crude Oil Inventories
Thursday: A couple of FOMC members speak, one at 11:45am and the other at 1:30pm Eastern Time (GMT - 5)
Friday: Germany's GDP, US Core Retail Sales, PPI, Michigan Consumer Sentiment and Expectations.

Options Trading results - Closed positions (trading costs included), we are down 1.08% for 2016. The S&P is up 0.65%. The portfolio is 47% invested, 53% in cash. The current positions are likely to bring some nice returns and firmly put us in positive territory.

Forex Trading results - Up +0.59% for the year. Five closed trades in total so far: 1 win, 2 losses in EURUSD and 1 win, 1 loss in XAUUSD. Currently long XAUUSD (Gold).

Good luck this week my friends!

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